A little more than a year ago, Michael Fiebach had a phone call with Randy Reed, the manager of the well-known electronic music artist Pretty Lights. The artist's music had just topped The Pirate Bay's "most downloaded" list, a superlative that usually signals a high level of music piracy, but Fiebach, the CEO of Fame House, a digital marketing firm that has worked with some of the biggest names in the electronic music world (including Eminem's record label Shady Records), viewed the listing without the slightest bit of umbrage. "Here we are celebrating hitting #1 on Pirate Bay," Reed told Fiebach, "while major labels would be kicking, cursing, and sending take-down notices."
That's because Fiebach is one of dozens within the entertainment industry who have partnered with BitTorrent, the company that manages the peer-to-peer file sharing protocol of the same name, to promote and distribute free audio, text, and video content within its network. For the past few years, BitTorrent, which first launched in 2001, has engaged in an experiment to determine whether its users would be able to drive real revenue toward content producers. In the process, BitTorrent hopes to transform industry players who have long viewed the company with disdain into its allies.
For Pretty Lights, BitTorrent and Fame House bundled four of his songs (including his latest single) along with a video of his 2011 performance at the Bonnaroo music festival into a single BitTorrent file. From there, the file-sharing company employed a number of methods to promote the item to its 130 million active users.
Within months, the file had surpassed 6 million downloads worldwide. Pretty Lights' E-mail list had increased by 60,000, his Facebook page by 30,000 likes, and his website traffic increased by more 700 percent.
"In terms of the value of 80,000 new fans," says Fiebach, "there's a sliding scale there in terms of different types of fans in different geographic areas. But I can tell you that [the experiment] significantly grew his E-mail list, and each person on that E-mail list is a potential purchaser of something. So if you're going to say the average click-through rate in an E-mail is 10 percent, that means you just got about 8,000 new people who are going to buy something at some point. The value of that in a year? That might be $80,000 a year, $100,000 a year. It might be much more than that."
Those who have followed and advocated for BitTorrent likely weren't surprised by such results. Copyright activists have long touted the benefits of such loss-leader promotions. In May 2012, many felt vindicated when North Carolina State University economist Robert Hammond released a study indicating that rampant BitTorrent piracy can boost music sales.
For his paper, titled "Profit Leak? Pre-Release File Sharing and the Music Industry," Hammond amassed a number of download statistics between May 2010 and January 2011 and devised a model to derive the connection between illegal downloads and music sales. While skeptics would simply point out that popular music titles would be the most likely to have a high number of piracy downloads, the economist claimed his model isolated a causal effect "by exploiting exogenous variation in how widely available the album was prior to its official release date."
Another study, this one conducted by researchers from the University of Minnesota and Wellesley College, found that box office movie sales were only negatively affected (by about 7 percent) when there was a significant time gulf between a U.S. and international release.
"We do not see evidence of elevated sales displacement in U.S. box office revenue following the adoption of BitTorrent, and we suggest that delayed legal availability of the content abroad may drive the losses to piracy," the authors concluded.
BitTorrent VP of marketing Matt Mason, who joined the company a little more than a year ago, has been directly involved in the partnerships and views these promotions as only the beginning of a long, fruitful relationship with the industry, one that can eventually be monetized at a mass scale.
Corrected on 02/11/13: An earlier version of this article misidentified Matt Mason’s title and BitTorrent’s platform.